President Moves to Rescue Chinese Telecom as Beijing Funds Major Trump Project

Chinese President Xi Jinping and U.S. President Donald Trump attend a welcoming ceremony November 9, 2017 in Beijing, China. (Photo: Thomas Peter-Pool/Getty Images)

A screaming violation of the Constitution.

By Jake Johnson / 05.23.2018

“This affair is a screaming violation of the U.S. Constitution’s emoluments clause.”

That was how Robert Weissman of Public Citizen described President Donald Trump’s efforts this week to negotiate a “sweetheart deal” for the failing Chinese telecom giant ZTE just after news broke that a Chinese government-run entity dumped a $500 million loan into a major development project in Indonesia, which will reportedly include a Trump-branded hotel and golf course.

“In this case, there’s nothing hypothetical about how the emolument—the loan—might affect the president’s actions [on behalf of ZTE]. It’s almost inconceivable that it didn’t,” Weissman argued in a statement on Tuesday. “Is there anyone in America who believes that benefiting indirectly from a Chinese loan would not influence Trump’s decision to intercede?”

Weissman’s comments on the potentially explosive developments came as Trump and the Chinese government reportedly inched closer to an agreement to free ZTE from severe penalties imposed by the U.S. over export law violations, which are threatening to put the company out of business.

While White House officials have insisted that the president’s attempt to rescue ZTE is a result of policy discussions with Chinese President Xi Jinping and not a “quid pro quo,” ethics experts argue that the timing of the Chinese government’s massive loan to fund a project in which Trump has direct financial interests and Trump’s subsequent efforts to help ZTE raise serious suspicions about the U.S. president’s motivations for rescuing the company.

Don Fox, the former general counsel of the U.S. Office of Government Ethics (OGE), argued in an interview with the Associated Press on Wednesday that the Chinese government “knew exactly what they were investing in” when it injected $500 million into the Indonesia project, which is called Lido City. “It also strains credulity that the president wasn’t aware of this when he made his favorable comments about ZTE.”

“Ethics watchdogs and political adversaries called last week’s events a blatant case of Trump appearing to trade foreign favors to his business for changes in government policy, exactly the kind of situation they predicted would happen when the real estate mogul turned politician refused to divest from his sprawling business interests,” AP added.

Trump’s effort to help save ZTE from collapse has drawn criticism from both sides of the political aisle, and on Tuesday the Senate Banking Committee voted overwhelmingly in favor of a measure that would require Trump to consult Congress before reducing penalties on the company.

Summarizing the Trump-ZTE controversy in an article on Monday, Vox‘s Matt Yglesias argued that in a “normal administration,” the fact that “Trump has a direct financial interest in a major real estate development project essentially underwritten by a state-owned Chinese bank” would be a “weeks-long scandal dominating media coverage of the White House.”

“The existence of this egregious conflict of interest…has been noted by the press but remains weirdly unintegrated into ongoing coverage of the Trump administration’s back-and-forth on China policy,” Yglesias concluded.

Meanwhile, Lori Wallach, director of Public Citizen’s Global Trade Watch, said in a statement that Trump’s effort to aid ZTE betrays his campaign promise to “get tough on China and restore some of the millions of American jobs lost to unfair China trade.”

“Voters who made Trump president because they believed his promise…will be irate about his caving in to Wall Street instead of achieving any real change and even intervening to reverse national security sanctions for a specific Chinese firm that had admitted to wrongdoing,” Wallach said. “So imagine the reaction when they realize that he not only betrayed them, but that doing so benefitted his personal business interests.”